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Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: shane forbes who wrote (8780)	2/16/1998 12:19:00 AM
From: Jonathan Bird	Read Replies (2) \| Respond to of 11057

I bought because of the 400 million offering in convertible debt. Figured that this means WDC has a cushion to prevent them from going out of business if things got that bad. I agree it is good for them to have a cushion. But look at it this way. First WDC increased their credit arrangements by 100 mil. Then they offer 275 mil in debs. Then they decide to offer 125 mil more. That's an increase of 500,000,000 in available cash all announced within the the same month. Does this sound like a management who believes that sunny days are right around the corner? Or does it show a management who has just realized that things are going to get a lot worse and its time to hunker down. If you don't believe it shows they are getting ready to absorb huge losses, then what would it take to convince you? 600 mil in debs? 800? At what point does the need for an absolutely HUGE amount of cash($5.72 per share so far) begin to flash warning lights? "Never borrow more money then you need" a banker will tell you. BTW, WDC's book value is now about 620 mil. That should put "HUGE" into perspective. Jon Bird

To: shane forbes who wrote (8780)	2/16/1998 2:22:00 AM
From: Z Analyzer	Read Replies (1) \| Respond to of 11057

<<What any one can do is call the companies and ask them. >> I did this a few days ago with WDC, SEG and Quantum. No good news beyond the increased January sell thru mentioned in the conf calls and pricing is tough again. Two analysts I spoke with saw no signs of things improving. That said, I have always found that nobody sees excess inventory coming so I doubt they'll see it going. As for WDC, one analyst said he thought they were having some problems with their 2.1 GB/platter program (no specifics). Both mentioned that in past cycles, these stocks have traded down to book value. For disclosure, I am short WDC after these discussions. Hoping not to be bitten by an industry pickup.